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This book helps readers understand the widely documented distortion in the portfolio choice of individual investors toward proximate firms - the proximity bias phenomenon. First, it recapitulates the fundamentals of modern portfolio theory. It then goes on to describe and demonstrate different approaches on how to measure proximity bias and identifies and examines potential motives and reasons for such a bias. In addition, the book presents new analysis on the financial effects of individual investors' proximity bias, explaining and contributing with possible policy implications on their portfolio distortion. This book will be of interest to students and researchers, as well as decision-makers in business firms and households.

Financial Systems, Markets and Institutional Changes analyses and exemplifies how the financial system endogenously adjusts to institutional changes such as new technology, political tendencies, cultural differences, new business models, and government interactions. It puts particular emphasis on how different institutional settings affect firms' borrowing and how the financial crisis affected the relationship between borrowing firms and lending banks. It further increases our understanding of how efficient financial markets are formed, by addressing issues related to the globalization of the financial market, questioning whether the EMU, with its regional imbalances, is an optimal currency union, and putting new requirements on an international lender of last resort. Recent technology developments, with high frequency trading, and the increased existence of Islamic banking are two further examples of institutional changes that form new actors and new markets.

Abstract
This study focuses on firms with cost-efficient technology that use licensing to influence product market behaviour, market prices and outputs and the resulting welfare effects. We show how licensing fees can be constructed that lead to identical collective industry outputs as under collusion while industry output is equal to or higher than that achieved under competition and sustained in equilibrium. Hence, consumers are either indifferent to firms' collusion or better off when they do collude, whereas firms (producers) are always better off due to the improved cost efficiency of integrating the new production technology. This provides a theoretical foundation that explains why technology licensing is observed in highly concentrated industries characterised by significant diseconomies of scale relative to demand. We contribute to the literature by demonstrating how technology licensing involving collusion can reduce the dissipation effect and improve social welfare in oligopolistic industries. An important policy implication is that collusion involving technology licensing should not always be challenged by antitrust authorities, particularly when it does not transfer welfare from consumers to producers.

In order to accomplish a sounder banking industry, banks are challenged to adopt and pursue good governance practices. This challenge relates to decisions and activities conducted by top management and other inside stakeholders, but also increasingly to the collective pressures from, and evaluation measures adopted by, outside stakeholders. This book comprises a selection of high-quality research papers and provides insight into central issues such as deleveraging and other regulatory measures for strengthening bank stability. It includes empirical studies on the relationship between the board structures of banks and their financial risk-taking under extreme market conditions as well as on the financial crisis' impact on banks' lending capacity and the overall financial intermediation model. The book also includes in-depth analyses of the determinants of bank reputation and the future prospects of small banks.